Olympic pay deal in doubt amid fears of rising costs

The use of a pioneering pay deal for electricians on Olympic projects could be in jeopardy because of fears the move may breach the programme’s £9.3bn budget.

The ODA had been expected to employ the major projects agreement (MPA) across the programme and has been in early-stage talks over the pay deal. The MPA, which was first used on Heathrow Terminal 5, allows electricians to earn up to £55,000 a year in return for a certain level of productivity.

Sources close to the discussions said talks were faltering owing to the ODA’s concern over the escalating cost of the project, which is now expected to be £9.3bn compared with an original estimate of £2.4bn. The revelation of overruns on M&E packages on T5, reported in Building last week, will add to the client’s concern.

An ODA spokesperson said: “We have had exploratory discussions with the MPA forum and are looking forward to more.”

The difficulties in the talks come at a difficult time for the ODA. Last week, it announced that it was down to one bidder to build the aquatics centre – Balfour Beatty – after Hochtief pulled out. A third contractor, Eiffel, withdrew last month because of concerns over the target price contract.

Hochtief this week cited a heavy workload as the reason for its withdrawal, but the move will come as a further blow to the project, which has already been scaled back twice in order to cut back on costs.

The ODA insisted that the procurement process remained on track and that a contractor would be appointed “around the turn of the year”.

It also emerged this week that the ODA is being forced to consider alternative sites to hold the canoe events after discovering contamination at its original choice.

The ODA planned to build the venue at Spitalbrook in Broxbourne, Hertfordshire. However, the Environment Agency and local authority have found evidence of hydrocarbon and tar contamination.